A business law blog published by the business lawyers at AttorneyBritt - Gary L. Britt, CPA, J.D. Commentary and information regarding the laws and regulations applicable to individuals, corporations, partnerships, and limited liability companies (LLCs); as they relate to the myriad of business transactions, contracts, and agreements every business owner, shareholder, member, physician, and/or health care provider must consider.

Tuesday, June 30, 2015

Tax Tips For Students With Summer Jobs

Here are some tips
students should know about summer jobs and taxes:

Withholding and Estimated Tax. If you are an employee, your employer withholds tax from your paychecks. If you are self-employed, you may have to pay estimated tax directly to the IRS on set dates during the year. This is how our pay-as-you-go tax system works.

New Employees. When you get a new job, you will need to fill out a Form W-4,
Employee’s Withholding Allowance Certificate. Employers use it to
figure how much federal income tax to withhold from your pay. The IRS Withholding Calculator tool on IRS.gov can help you fill out the form.

Self-Employment. Money you earn doing work for others is taxable. Some work you do may count as self-employment.
These can be jobs like baby-sitting or lawn care. Keep good records of
your income and expenses related to your work. You may be able to deduct (subtract) those costs from your income on your tax return. A deduction can cut taxes.

Tip Income. All tip income
is taxable. Keep a daily log to report them. You must report $20 or
more in cash tips in any one month to your employer. And you must report
all of your yearly tips on your tax return.

Payroll Taxes. You may earn too little from your summer job to owe income tax. But your employer usually must withhold social security and Medicare taxes
from your pay. If you’re self-employed, you may have to pay them
yourself. They count for your coverage under the Social Security system.

Newspaper Carriers. Special rules apply to a newspaper carrier
or distributor. If you meet certain conditions, you are self-employed.
If you do not meet those conditions, and are under age 18, you may be
exempt from social security and Medicare taxes.

ROTC Pay. If you’re in ROTC, active duty pay, such as pay you get for summer camp, is taxable. A subsistence allowance you get while in advanced training is not taxable.

Use IRS Free File. You can prepare and e-file your tax return for free using IRS Free File.
It is only available on IRS.gov. You may not earn enough money to be
required to file a federal tax return. Even if that is true, you may
still want to file. For example, if your employer withheld income tax
from your pay, you will have to file a return to get a tax refund.